Renewable energy fund reaps a windfall for '13

By Bob Sanders

Published: December 14, 2012

This year, fewer than 100 homeowners will receive a 30 percent rebate on their purchase of a wood pellet furnace.

Next year it could be a lot more, if the Legislature leaves the state's Renewable Energy Fund law alone. Or lawmakers could amend the law and grab the nearly more than $13 million now in the Renewable Energy Fund to help balance the state's budget.

In 2012, the fund contained $2.3 million, but next year it's expected to grow substantially, and the Legislature approved spending about $5.6 million in 2013.

But the fund got even more than expected -- $19.1 million, and with some remaining from 2012, the fund's size is nearly 10 times the amount spent in 2012 and at least $13 million more than anticipated.

But nobody is counting on this money quite yet.

Where the money goes

While administrators of the state's Renewable Energy Fund are still trying to figure out what to do with next year's windfall, here are some of the things it has funded in 2012.

Besides a $450,000 appropriation to fund rebates to cover the installation cost of fully automated wood pellet boiler heating systems, to a maximum of $6,000, the fund also gives out grants for specific projects via a competitive process. The most recent grants were given to:

• Cartographic Associates Inc., $43,000: Cartographic Associates will replace three oil-fired furnaces at its offices in downtown Littleton with a single high-efficiency wood pellet boiler. This project will be leveraged with an investment of $22,762 by the grantee, for a total project cost of $65,762.

• Colby Solar LLC, $100,000: Colby Solar will install solar electric panels on Colby-Sawyer College campus buildings in New London. Colby-Sawyer will purchase power from Colby Solar at below-market rates for six years. The college will then purchase the solar arrays at a deeply discounted price. The solar system is expected to result in a savings of about $20,000. Total project cost is $474,622.

• Northeast BioEnergy Systems LLC, $93,000: Northeast BioEnergy Systems will install a wood chip boiler at Russell Elementary School in Rumney. The school will enter into a power purchase agreement with Northeast BioEnergy Systems, with the option to purchase the system later at a deep discount compared to the original project cost of $372,000. The new boiler is expected to result in cost savings of $35,000 annually.

• Sullivan County, $300,000: The county will install a district energy system at the Sullivan County Complex. Wood chips will be used to generate both heat and electricity for several county buildings, including a jail and nursing home. The renewable cogeneration system is expected to create energy savings of $290,000 per year. Total project cost: $3.18 million.

• University of New Hampshire, $59,750: UNH will install a solar hot air system on the façade of Kingsbury Hall on the Durham campus. This system will use sunlight to pre-heat the large volumes of fresh air. Total project cost: $119,500.

• Walker Wellington LLC, $100,000: Working in partnership with the city of Dover, Walker Wellington will install a turbine generator in the outfall pipe at the city's wastewater treatment facility. The turbine will generate 80 megawatt hours of electricity per year, Total project cost: $129,000.

The Legislature has raided designated funds to fill in general fund budget gaps before, most notably the Regional Greenhouse Gas Initiative. Like the Renewable Energy Fund, the RGGI money did not come from the general fund. It comes from power generators that buy allowances at quarterly auctions. The allowances essentially give them permission to emit a certain amount of greenhouse gases (primarily carbon) into the atmosphere.

In 2011, lawmakers took about $3.1 million from RGGI to balance the budget. Last year, they took the program away from Public Utilities Commission oversight, and the money was returned to utilities for conservation and toward a ratepayer rebate.

At the time, Republican lawmakers complained that the PUC was picking winners and losers and wanted to do away with RGGI altogether, despite the support of some business groups -- like the Retail Merchants Association of New Hampshire -- that benefited from the RGGI conservation fund.

Democratic Gov. John Lynch wound up vetoing an outright repeal of RGGI

Biomass energy demand

The Renewable Energy Fund is slightly different. Its money comes from fees paid by utilities that don't meet the state's renewable portfolio standard, which requires that almost a quarter of the energy generated in New Hampshire must come from renewable sources by 2025. Utilities that don't meet certain benchmarks must pay into the Renewable Energy Fund.

In 2011 (on which the funding for fiscal year 2013 is based), the benchmark rose more than 2 percent, to 9.6 percent of all power generated.

That includes a 2 percent requirement for "new" renewables (from plants built after 2006) and a 6.5 percent requirement for "old" renewables (primarily from biomass plants built before 2006). The hydro energy requirement is 1 percent.

It is the demand for biomass power in other states with renewable portfolio standards that is the main reason behind the surplus.

That demand, particularly in Connecticut, makes it harder for utilities to meet the 2011 standards in New Hampshire, where utilities are penalized $30.46 per megawatt hour.

Money from the Renewable Energy Fund, administered by the PUC, is used for commercial, industrial and residential renewable energy projects.

Of the $5.6 million the fund is authorized to spend next year, the biggest chunk ($2.5 million) would go to a competitive grant program for commercial and industrial projects. Some $1 million would be dedicated as home solar and wind rebates, while the remainder would be spent on rebates for thermal projects -- solar hot water and wood pellet furnaces.

What becomes of the remaining $13 million is an open question.

"The law says it's a non-lapsing dedicated fund, and it would enable us to significantly expand our program offerings," said Jack Ruderman, director of the PUC's Sustainable Energy Division. "But of course, we are planning for both contingencies" - a much larger amount of money to dispense or a decision by the Legislature to do something else with the funds.

Developing a plan to spend 10 times more than was spent in the previous year takes time, said Ruderman, so any request to the Legislative Fiscal Committee won't be submitted until next year -- a year when the Democrats just won back control of the House and Republicans in the Senate hold a bare majority.

As NHBR went to press, organization of the Legislature for 2013 was just under way, and attempts to contact House and Senate leadership were unsuccessful.

This article appears in the December 14 2012 issue of New Hampshire Business Review